Search
 

Fed's Rate Cut to Help Tenants First, Owners Last

LOS ANGELES-Commercial real estate investors from Wall Street to Pacific Coast Highway cheer the Federal Reserve's surprise rate-reduction. Tenants will enjoy the benefits first but owners will eventually reap their share too, experts tell GlobeSt.com.

By David W. Myers & Erin Cassin | Updated on January 04, 2001

LOS ANGELES-Commercial real estate investors from Wall Street to the Pacific Coast Highway are cheering the surprise interest-rate cut announced by the Federal Reserve, saying the reduction will bolster the prospects of many key tenants and allow owners of some marginally successful projects to refinance and improve their returns.

Fed Chairman Alan Greenspan and his Federal Open Market Committee stunned stock-market traders and the better part of the world on Tuesday by announcing that they were immediately slashing the US federal funds rate—the rate that big banks charge each other for overnight loans—to 6% from 6.5%. It was only the second time in two decades the Fed moved rates without holding a formal meeting, and the decision touched off huge gains in both the Dow Jones Industrial Index and the battered Nasdaq market.

Few real estate experts believe that Tuesday’s rate-reduction will trigger an explosion of new construction anytime soon. Experts note that smart developers base their new projects on demographics, supply-and-demand figures, and other trends that aren’t influenced much by short-term changes in interest rates.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2024 ALM Global, LLC. All Rights Reserved.